The Republic of Ireland has been labelled as a tax haven or corporate tax haven by multiple financial reports, an assertion which the state denies.[a] Ireland's base erosion and profit shifting (BEPS) tools give some foreign corporates § Effective tax rates of 0% to 2.5%[b] on global profits re-routed to Ireland via their tax treaty network.[c][d] Ireland's aggregate § Effective tax rates for foreign corporates is 2.2-4.5%. Ireland's BEPS tools are the world's largest BEPS flows, exceed the entire Caribbean system, and artificially inflate the US-EU trade deficit. Ireland's tax-free QIAIF & L-QIAIF regimes, and Section 110 SPVs, enable foreign investors to avoid Irish taxes on Irish assets, and can be combined with Irish BEPS tools to create confidential routes out of the Irish corporate tax system.[e] As these structures are OECD-whitelisted, Ireland's laws and regulations allow the use of data protection and data privacy provisions, and opt-outs from filing of public accounts, to obscure their effects. There is arguable evidence that Ireland acts as a § Captured state, fostering tax strategies.
Ireland is on all academic "tax haven lists", including the § Leaders in tax haven research, and tax NGOs. Ireland does not meet the 1998 OECD definition of a tax haven, but no OECD member, including Switzerland, ever met this definition; only Trinidad & Tobago met it in 2017. Similarly, no EU-28 country is amongst the 64 listed in the 2017 EU tax haven blacklist and greylist. In September 2016, Brazil became the first G20 country to "blacklist" Ireland as a tax haven.
Ireland's situation is attributed to § Political compromises arising from the historical U.S. "worldwide" corporate tax system, which has made U.S. multinationals the largest users of tax havens, and BEPS tools, in the world.[f] The U.S. Tax Cuts and Jobs Act of 2017 ("TCJA"), and move to a hybrid "territorial" tax system,[g] removed the need for some of these compromises. In 2018, IP-heavy S&P500 multinationals guided similar post-TCJA effective tax rates, whether they are legally based in the U.S. (e.g. Pfizer[h]), or Ireland (e.g. Medtronic[h]). While TCJA neutralised some Irish BEPS tools, it enhanced others (e.g. Apple's "CAIA"[i]). A reliance on U.S. corporates (80% of Irish corporation tax, 25% of Irish labour, 25 of top 50 Irish firms, and 57% of Irish value-add), is a concern in Ireland.[j]
Ireland's weakness in attracting corporates from "territorial" tax systems (Table 1),[k] was apparent in its 2017-18 failure to attract financial services jobs due to Brexit.[l] Ireland's diversification into full tax haven tools[m] (e.g. QIAIF, L-QIAIF, and ICAV), has seen tax-law firms, and offshore magic circle firms, set up Irish offices to handle Brexit-driven tax restructuring. These tools made Ireland the world's 3rd largest Shadow Banking OFC, and 5th largest Conduit OFC.
Ireland has been associated with the term "tax haven" since the U.S. IRS produced a list on the 12 January 1981.[n] Ireland has been a consistent feature on almost every non-governmental tax haven list from Hines in February 1994, to Zucman in June 2018 (and each one in-between). However, Ireland has never been considered a tax haven by either the OECD or the EU Commission. These two contrasting facts are used by various sides, to allegedly prove or disprove that Ireland is a tax haven, and much of the detail in-between is discarded, some of which can explain the EU and OCED's position. Confusing scenarios have emerged, for example:
The next sections chronicle the detail regarding Ireland's label as a tax haven (most cited Sources and Evidence), and detail regarding the Irish State's official Rebuttals of the label (both technical and non-technical). The final section chronicles the academic research on the drivers of U.S., EU, and OCED, decision making regarding Ireland.
Ireland has also been labelled related terms to being a tax haven:
The term tax haven has been used by the Irish mainstream media and leading Irish commentators. Irish elected TDs have asked the question: "Is Ireland a tax haven?". A search of Dáil Éireann debates lists 871 references to the term. Some established Irish political parties accuse the Irish State of tax haven activities.
The international community at this point is concerned about the nature of tax havens, and Ireland in particular is viewed with a considerable amount of suspicion in the international community for doing what is considered - at the very least - on the boundaries of acceptable practices.
Ireland ranks in all non-political "tax haven lists" going back to the first lists in 1994,[n] and features in all "proxy tests" for tax havens and "quantitative measures" of tax havens. The level of base erosion and profit shifting (BEPS) by U.S. multinationals in Ireland is so large, that in 2017 the Central Bank of Ireland abandoned GDP/GNP as a statistic to replace it with Modified gross national income (GNI*). Economists note that Ireland's distorted GDP is now distorting the EU's aggregate GDP, and has artificially inflated the trade-deficit between the EU and the US. (see Table 1).
Ireland's IP-based BEPS tools use "intellectual property" ("IP") to "shift profits" from higher-tax locations, with whom Ireland has bilateral tax treaties, back to Ireland.[d] Once in Ireland, these tools reduce Irish corporate taxes by re-routing to say Bermuda with the Double Irish BEPS tool (e.g. as Google and Facebook did), or to Malta with the Single Malt BEPS tool (e.g. as Microsoft and Allergan did), or by writing-off internally created virtual assets against Irish corporate tax with the Capital Allowances for Intangible Assets ("CAIA") BEPS tool (e.g. as Apple did post 2015). These BEPS tools give an Irish corporate effective tax rate (ETR) of 0-2.5%. They are the world's largest BEPS tools, and exceed the aggregate flows of the Caribbean tax system.
While IP-based BEPS tools are the majority of Irish BEPS flows, they were developed from Ireland's traditional expertise in inter-group contract manufacturing, or transfer pricing-based (TP) BEPS tools (e.g. capital allowance schemes, inter-group cross-border charging), which still provide material employment in Ireland (e.g. from U.S. life sciences firms). Some corporates like Apple maintain expensive Irish contract manufacturing TP-based BEPS operations (versus cheaper options in Asia, like Apple's Foxconn), to give "substance" to their larger Irish IP-based BEPS tools.
By refusing to implement the 2013 EU Accounting Directive (and invoking exemptions on reporting holding company structures until 2022), Ireland enables their TP and IP-based BEPS tools to structure as "unlimited liability companies" ("ULC") which do not have to file public accounts with the Irish CRO.
Ireland's Debt-based BEPS tools (e.g. the Section 110 SPV), have made Ireland the 3rd largest global Shadow Banking OFC, and have been used by Russian banks to circumvent sanctions. Irish Section 110 SPVs offer "orphaning" to protect the identity of the owner, and to shield the owner from Irish tax (the Section 110 SPV is an Irish company). They were used by U.S. distressed debt funds to avoid billions in Irish taxes, assisted by Irish tax-law firms using in-house Irish children's charities to complete the orphan structure, that enabled the U.S. distressed debt funds to export the gains on their Irish assets, free of any Irish taxes or duties, to Luxembourg and the Caribbean (see Section 110 abuse).
Unlike the TP and IP-based BEPS tools, Section 110 SPVs must file public accounts with the Irish CRO, which was how the above abuses were discovered in 2016-17. In February 2018 the Central Bank of Ireland upgraded the little-used L-QIAIF regime to give the same tax benefits as Section 110 SPVs but without having to file public accounts. In June 2018, the Central Bank reported that EUR55 billion of U.S.-owned distressed Irish assets, equivalent to 25% of Irish GNI*, moved out of Irish Section 110 SPVs and into L-QIAIFs.
Apple's Q1 2015 Irish restructure, post their EUR13 billion EU tax fine for 2004-2014, is one of the most advanced OECD-compliant BEPS tools in the world. It integrates Irish IP-based BEPS tools, and Jersey Debt-based BEPS tools, to materially amplify the tax sheltering effects, by a factor of circa 2. Apple Ireland bought circa $300 billion of a "virtual" IP-asset from Apple Jersey in Q1 2015 (see leprechaun economics). The Irish "capital allowances for intangible assets" ("CAIA") BEPS tool allows Apple Ireland to write-off this virtual IP-asset against future Irish corporation tax. The EUR26.220 billion jump in intangible capital allowances claimed in 2015, showed Apple Ireland is writing-off this IP-asset over a 10-year period. In addition, Apple Jersey gave Apple Ireland the $300 billion "virtual" loan to buy this virtual IP-asset from Apple Jersey. Thus, Apple Ireland can claim additional Irish corporation tax relief on this loan interest, which is circa $20 billion per annum (Apple Jersey pays no tax on the loan interest it receives from Apple Ireland). These tools, created entirely from virtual internal assets financed by virtual internal loans, give Apple circa EUR45 billion per annum in relief against Irish corporation tax. In June 2018 it was shown that Microsoft is preparing to copy this Apple scheme, known as "the Green Jersey".
As the IP is a virtual internal asset, it can be replenished with each technology (or life sciences) product cycle (e.g. new virtual IP assets created offshore and then bought by the Irish subsidiary, with internal virtual loans, for higher prices). The Green Jersey thus gives a perpetual BEPS tool, like the double Irish, but at a much greater scale than the double Irish, as the full BEPS effect is capitalised on day one.
Experts expect the U.S Tax Cuts and Jobs Act of 2017 ("TCJA") GILTI-regime to neutralise some Irish BEPS tools, including the single malt and the double Irish. Because Irish intangible capital allowances are accepted as U.S. GILTI deductions, the "Green Jersey" now enables U.S. multinationals to achieve net effective U.S. corporate tax rates of 0% to 2.5% via TCJA's participation relief. As Microsoft's main Irish BEPS tools are the single malt and the double Irish, in June 2018, Microsoft was preparing a "Green Jersey" Irish BEPS scheme. Irish experts, including Seamus Coffey, Chairman of the Irish Fiscal Advisory Council and author of the Irish State's 2017 Review of Ireland's Corporation Tax Code, expects a boom in U.S. on-shoring of virtual internal IP assets to Ireland, via the Green Jersey BEPS tool (e.g. under the capital allowances for intangible assets scheme).
Ireland's Qualifying Investor Alternative Investment Fund ("QIAIF") regime is a range of five tax-free legal wrappers (ICAV, Investment Company, Unit Trust, Common Contractual Fund, Investment Limited Partnership). Four of the five wrappers do not file public accounts with the Irish CRO, and therefore offer tax confidentiality and tax secrecy. While they are regulated by the Central Bank of Ireland, like the Section 110 SPV, it has been shown many are effectively unregulated "brass plate" entities. The Central Bank has no mandate to investigate tax avoidance or tax evasion, and under the 1942 Central Bank Secrecy Act, the Central Bank of Ireland cannot send the confidential information which QIAIFs must file with the Bank to the Irish Revenue.
QIAIFs have been used in tax avoidance on Irish assets, on circumventing international regulations, on avoiding tax laws in the EU and the U.S. QIAIFs can be combined with Irish corporate BEPS tools (e.g. the Orphaned Super-QIF), to create routes out of the Irish corporate tax system to Luxembourg, the main Sink OFC for Ireland. It is asserted that a material amount of assets in Irish QIAIFs, and the ICAV wrapper in particular, are Irish assets being shielded from Irish taxation. Offshore magic circle law firms (e.g. Walkers and Maples and Calder, who have set up offices in Ireland), market the Irish ICAV as a superior wrapper to the Cayman SPC (Maples and Calder claim to be a major architect of the ICAV), and there are explicit QIAIF rules to help with re-domiciling of Cayman/BVI funds into Irish ICAVs.
There is evidence Ireland meets the captured state criteria for tax havens. When the EU investigated Apple in Ireland in 2016 they found private tax rulings from the Irish Revenue giving Apple a tax rate of 0.005% on over EUREUR110 billion of cumulative Irish profits from 2004 to 2014. When the Irish Finance Minister Michael Noonan was alerted by an Irish MEP in 2016 to a new Irish BEPS tool to replace the Double Irish (called the Single Malt), he was told to "put on the green jersey". When Apple executed the largest BEPS transaction in history in Q1 2015, the Central Statistics Office suppressed data to hide Apple's identity. Noonan changed the capital allowances for intangible assets scheme rules, the IP-based BEPS tool Apple used in Q1 2015, to reduce Apple's effective tax rate from 2.5% to 0%. When it was discovered in 2016 that U.S. distressed debt funds abused Section 110 SPVs to shield EUR80 billion in Irish loan balances from Irish taxes, the Irish State did not investigate or prosecute (see Section 110 abuse). In February 2018, the Central Bank of Ireland, who regulates Section 110 SPVs, upgraded the little used tax-free L-QIAIF regime, which has stronger privacy from public scrutiny. In June 2018, U.S. distressed debt funds transferred EUR55 billion of Irish assets (or 25% of Irish GNI*), out of Section 110 SPVs and into L-QIAIFs.
Global legal firm Baker McKenzie, representing a coalition of 24 multinational U.S. software firms, including Microsoft, lobbied Michael Noonan, as [Irish] minister for finance, to resist the [OECD MLI] proposals in January 2017. In a letter to him the group recommended Ireland not adopt article 12, as the changes "will have effects lasting decades" and could "hamper global investment and growth due to uncertainty around taxation". The letter said that "keeping the current standard will make Ireland a more attractive location for a regional headquarters by reducing the level of uncertainty in the tax relationship with Ireland's trading partners".
Tax haven investigator Nicholas Shaxson documented how Ireland's captured state uses a complex and "siloed" network of Irish privacy and data protection laws to navigate around the fact that its tax tools are OECD-whitelisted, and therefore must be transparent to some State entity. For example, Irish tax-free QIAIFs (and L-QIAIFs) are regulated by the Central Bank of Ireland and must provide the Bank with details of their financials. However, the 1942 Central Bank Secrecy Act prevents the Central Bank from sending this data to the Revenue Commissioners. Similarly, the Central Statistics Office (Ireland) stated it had to restrict its public data release in 2016-17 to protect the Apple's identity during its 2015 BEPS action, because the 1993 Central Statistics Act prohibits use of economic data for revealing such activities. When the EU Commission fined Apple EUR13 billion for illegal State aid in 2016, there were no official records of any discussion of the tax deal given to Apple outside of the Irish Revenue Commissioners because such data is also protected. When Tim Cook stated in 2016 that Apple was the largest tax-payer in Ireland, the Irish Revenue Commissioners quoted Section 815A of the 1997 Tax Acts that prevents them disclosing such information, even to members of Dáil Éireann, or the Irish Department of Finance (despite the fact that Apple is circa one-fifth of Ireland's GDP).
Commentators note the plausible deniability provided by Irish privacy and data protection laws, that enable the State to function as a tax haven while maintaining OECD compliance. They ensure the State entity regulating each tax tool are "siloed" from the Irish Revenue, and public scrutiny via FOI laws.
In February 2019, The Guardian reported on leaked Facebook internal reports revealing the influence Facebook had on the Irish State, to which Cambridge University academic John Naughton stated: "the leak was "explosive" in the way it revealed the "vassalage" of the Irish state to the big tech companies". In April 2019, Politico reported on concerns that Ireland was protecting Facebook and Google from the new EU GDPR regulations, stating: "Despite its vows to beef up its threadbare regulatory apparatus, Ireland has a long history of catering to the very companies it is supposed to oversee, having wooed top Silicon Valley firms to the Emerald Isle with promises of low taxes, open access to top officials, and help securing funds to build glittering new headquarters."
The Irish State refutes tax haven labels as unfair criticism of its low, but legitimate, 12.5% Irish corporate tax rate, which it defends as being the effective tax rate ("ETR"). Independent studies show that Ireland's aggregate effective corporate tax rate is between 2.2% to 4.5% (depending on assumptions made). This lower aggregate effective tax rate is consistent with the individual effective tax rates of U.S. multinationals in Ireland (U.S.-controlled multinationals are 14 of Ireland's largest 20 companies, and Apple alone is over one-fifth of Irish GDP; see "low tax economy"), as well as the IP-based BEPS tools openly marketed by the main tax-law firms in the Irish International Financial Services Centre with ETRs of 0-2.5% (see "effective tax rate").
Two of the world's main § Leaders in tax haven research, estimated Ireland's effective corporate tax rate to be 4%: James R. Hines Jr. in his 1994 Hines-Rice paper on tax havens, estimated Ireland's effective corporate rate was 4% (Appendix 4); Gabriel Zucman, 24 years later, in his June 2018 paper on corporate tax havens, also estimated Ireland's effective corporate tax to be 4% (Appendix 1).
The disconnect between the ETR of 12.5% claimed by the Irish State and its advisors, and the actual ETRs of 2.2-4.5% calculated by independent experts, is because the Irish tax code considers a high percentage of Irish income as not being subject to Irish taxation, due to various exclusions and deductions. The gap of 12.5% vs. 2.2-4.5% implies that well over two-thirds of corporate profits booked in Ireland are excluded from Irish corporate taxation (see Irish ETR).
This selective treatment allowed Apple to pay an effective corporate tax rate of 1 per cent on its European profits in 2003 down to 0.005 per cent in 2014.
Applying a 12.5% rate in a tax code that shields most corporate profits from taxation, is indistinguishable from applying a near 0% rate in a normal tax code.
The Irish State does not refer to QIAIFs (or L-QIAIFs), or Section 110 SPVs, which allow non-resident investors to hold Irish assets indefinitely without incurring Irish taxes, VAT or duties (e.g. permanent "base erosion" to the Irish exchequer as QIAIF units and SPV shares can be traded), and which can be combined with Irish BEPS tools to avoid all Irish corporate taxation (see § Domestic tax tools).
Salary taxes, VAT, and CGT for Irish residents are in line with rates of other EU-28 countries, and tend to be slightly higher than EU-28 averages in many cases. Because of this, Ireland has a special lower salary tax rate scheme, and other tax bonuses, for employees of foreign multinationals earning over EUR75,000 ("SARP").
Most Irish BEPS tools and QIAIFs are OECD-whitelisted (and can thus avail of Ireland's 70 bilateral tax treaties), and therefore while Ireland could meet the first OECD test, it fails the second and third OECD tests. The fourth OECD test (?) was withdrawn by the OECD in 2002 on protest from the U.S., which indicates is a political dimension to the definition. In 2017, only one jurisdiction, Trinidad & Tobago, met the 1998 OECD definition of a tax haven (Trinidad & Tobago is not one of the 35 OECD member countries), and the definition has fallen into disrepute.
Tax haven academic James R. Hines Jr. notes that OECD tax haven lists never include the 35 OECD member countries (Ireland is a founding OECD member). The OECD definition was produced in 1998 as part of the OECD's investigation into Harmful Tax Competition: An Emerging Global Issue. By 2000, when the OECD published their first list of 35 tax havens, it included no OECD member countries as they were now all considered to have engaged in the OECD's Global Forum on Transparency and Exchange of Information for Tax Purposes (see § External links). Because the OECD has never listed any of its 35 members as tax havens, Ireland, Luxembourg, the Netherlands and Switzerland are sometimes referred to as the "OECD tax havens".
Subsequent definitions of tax haven, and/or offshore financial centre/corporate tax haven (see definition of a "tax haven"), focus on effective taxes as the primary requirement, which Ireland would meet, and have entered the general lexicon. The Tax Justice Network, who places Ireland on its tax haven list, split the concept of tax rates from tax transparency by defining a secrecy jurisdiction and creating the Financial Secrecy Index. The OECD has never updated or amended its 1998 definition (apart from dropping the 4th criteria). The Tax Justice Network imply the U.S. may be the reason.
While by 2017, the OECD only considered Trinidad and Tobago to be a tax haven, in 2017 the EU produced a list of 17 tax havens, plus another 47 jurisdictions on the "grey list", however, as with the OECD lists above, the EU list did not include any EU-28 jurisdictions. Only one of the EU's 17 blacklisted tax havens, namely Samoa, appeared in the July 2017 Top 20 tax havens list from CORPNET.
The EU Commission was criticised for not including Ireland, Luxembourg, the Netherlands, Malta and Cyprus, and Pierre Moscovici, explicitly stated to an Irish State Oireachtas Finance Committee on 24 January 2017: Ireland is not a tax haven, although he subsequently called Ireland and the Netherlands "tax black holes" on 18 January 2018.
The first major § Leaders in tax haven research was James R. Hines Jr., who in 1994, published a paper with Eric M Rice, listing 41 tax havens, of which Ireland was one of their major 7 tax havens. The 1994 Hines-Rice paper is recognised as the first important paper on tax havens, and is the most cited paper in the history of research on tax havens. The paper has been cited by all subsequent, most cited, research papers on tax havens, by other § Leaders in tax haven research, including Desai, Dharmapala, Slemrod, and Zucman. Hines expanded his original 1994 list to 45 countries in 2007, and to 52 countries in the Hines 2010 list, and used quantitative techniques to estimate that Ireland was the third largest global tax haven. Other major papers on tax havens by Dharmapala (2008, 2009), and Zucman (2015, 2018), cite the 1994 Hines-Rice paper, but create their own tax haven lists, all of which include Ireland (e.g., the June 2018, Zucman-Tørsløv-Wier 2018 list).
The 1994 Hines-Rice paper was one of the first to use the term "profit shifting". Hines-Rice also introduced the first quantitative tests of a tax haven, which Hines felt were needed as many tax havens had non-trivial "headline" tax rates. These two tests are still the most widely quoted proxy tests for tax havens in the academic literature. The first test, extreme distortion of national accounts by BEPS accounting flows, was used by the IMF in June 2000 when defining offshore financial centres ("OFCs"), a term the IMF used to capture both traditional tax havens and emerging modern corporate tax havens:
The Hines-Rice paper showed that low foreign tax rates [from tax havens] ultimately enhance U.S. tax collections. Hines' insight that the U.S. is the largest beneficiary from tax havens was confirmed by others, and dictated U.S. policy towards tax havens, including the 1996 "check-the-box"[p] rules, and U.S. hostility to OECD attempts in curbing Ireland's BEPS tools.[q] Under the 2017 U.S. TCJA, U.S. multinationals paid a 15.5% repatriation tax on the circa $1 trillion in untaxed cash built up in global tax havens from 2004 to 2017.[r] Had these U.S. multinationals paid foreign taxes, they would have built up sufficient foreign tax credits to avoid paying U.S. taxes. By allowing U.S. multinationals to use global tax havens, the U.S. exchequer received more taxes, at the expense of other countries, as Hines predicted in 1994.
Several of Hines' papers on tax havens, including the calculations of the Hines-Rice 1994 paper, were used in the final report by the U.S. President's Council of Economic Advisors that justified the U.S. Tax Cuts and Jobs Act of 2017, the largest U.S. tax reform in a generation.
The Irish State dismisses academic studies which list Ireland as a tax haven as being "out-of-date", because they cite the 1994 Hines-Rice paper. The Irish State ignores the fact that both Hines, and all the other academics, developed new lists; or that the Hines-Rice 1994 paper is still considered correct (e.g. per the 2017 U.S. TCJA legislation). In 2013, the Department of Finance (Ireland) co-wrote a paper with the Irish Revenue Commissioners, which they had published in the State-sponsored ESRI Quarterly, which found the only sources listing Ireland as a tax haven were:[s]
The following is from a June 2018 Irish Independent article by the CEO of the key trade body that represents all U.S. multinationals in Ireland on the 1994 Hines-Rice paper:
However, it looks like the 'tax haven' narrative will always be with us - and typically that narrative is based on studies and data of 20 to 30 years' vintage or even older. It's a bit like calling out Ireland today for being homophobic because up to 1993 same-sex activity was criminalised and ignoring the joyous day in May 2015 when Ireland became the first country in the world to introduce marriage equality by popular vote.
In a less technical manner to the rebuttals by the Irish State, the labels have also drawn responses from leaders in the Irish business community who attribute the value of U.S. investment in Ireland to Ireland's unique talent base. At EUR334 billion, the value of U.S. investment in Ireland is larger than Ireland's 2016 GDP of EUR291 billion (or 2016 GNI* of EUR190 billion), and larger than total aggregate U.S. investment into all BRIC countries. This unique talent base is also noted by IDA Ireland, the State body responsible for attracting inward investment, but never defined beyond the broad concept.
Ireland has no university in the top 100. Irish education does not appear to be distinctive. Ireland has a high % of third-level graduates, but this is because it re-classified many technical colleges into degree-issuing institutions in 2005-08. This is believed to have contributed to the decline of its leading universities, of which there are barely two left in the top 200 (i.e. a quality over quantity issue). Ireland continues to pursue this strategy and is considering re-classifying the remaining Irish technical institutes as universities for 2019.
Ireland shows no apparent distinctiveness in any non-tax related metrics of business competitiveness including cost of living, league tables of favoured EU FDI locations, league tables of favoured EU destinations for London-based financials post-Brexit (which are linked to quality of talent), and the key World Economic Forum Global Competitiveness Report rankings.
Without its low-tax regime, Ireland will find it hard to sustain economic momentum
Irish commentators provide a perspective on Ireland's "talent base". The State applies an "employment tax"[t] to U.S. multinationals using Irish BEPs tools. To fulfil their Irish employment quotas, some U.S. technology firms perform low-grade localisation functions in Ireland which requires foreign employees speaking global languages (while many U.S. multinationals perform higher-value software engineering functions in Ireland, some do not). These employees must be sourced internationally. This is facilitated via a loose Irish work-visa programme. This Irish "employment tax" requirement for use of BEPS tools, and its fulfilment via foreign work-visas, is a driver of Dublin's housing crisis. This is consistent with a bias to property development-led economic growth, favoured by the main Irish political parties (see Abuse of QIAIFs).
In another less technical rebuttal, the State explains Ireland's high ranking in the established "proxy tests" for tax havens as a by-product of Ireland's position as preferred hub for global "knowledge economy" multinationals (e.g. technology and life sciences), "selling into EU-28 markets". When the Central Statistics Office (Ireland) suppressed its 2016-2017 data release to protect Apple's Q1 2015 BEPS action, it released a paper on "meeting the challenges of a modern globalised knowledge economy".
Ireland has no foreign corporates that are non-U.S./non-UK in its top 50 companies by revenue, and only one by employees (German Lidl who sells into Ireland). The UK multinationals in Ireland are either selling into Ireland (e.g. Tesco), or date pre-2009, after which the UK overhauled its tax system to a "territorial tax" model. Since 2009, the U.K has become a major tax haven (see U.K. transformation). Since this transformation, no major UK firms have moved to Ireland and most UK corporate tax inversions to Ireland returned; and Ireland has failed to win Brexit financial services firms.
In 2016, U.S. corporate tax expert, James R. Hines Jr., showed multinationals from "territorial" corporate taxation systems don't need tax havens, when researching behaviours of German multinationals with German academic tax experts.
U.S.-controlled multinationals are 25 of the top 50 Irish firms (including tax inversions), and 70% of top 50 revenue (see Table 1). U.S.-controlled multinations pay 80% of Irish corporate taxes (see "low tax economy"). Irish-based U.S. multinationals may be selling into Europe, however, the evidence is that they route all non-U.S. business through Ireland.[c] Ireland is more accurately described as a "U.S. corporate tax haven". The U.S. multinationals in Ireland are from "knowledge industries" (see Table 1). This is because Ireland's BEPS tools (e.g. the double Irish, the single malt and the capital allowances for intangible assets) require intellectual property ("IP") to execute the BEPS actions, which technology and life sciences possess in quantity (see IP-Based BEPS tools).
Intellectual property (IP) has become the leading tax-avoidance vehicle.
Rather than a "global knowledge hub" for "selling into Europe", Ireland is a base for U.S. multinationals, with sufficient IP to use Ireland's BEPS tools, to shield non-U.S. revenues from U.S. taxation.
No other non-haven OECD country records as high a share of foreign profits booked in tax havens[u] as the United States. [...] This suggests that half of all the global profits shifted to tax havens are shifted by U.S. multinationals. By contrast, about 25% accrues to E.U. countries, 10% to the rest of the OECD, and 15% to developing countries (Tørsløv et al., 2018).
In 2018, the U.S. converted into a hybrid "territorial" tax system (the U.S. was one of the last remaining pure "worldwide" tax systems). Post this conversion, U.S. effective tax rates for IP-heavy U.S. multinationals are very similar to the effective tax rates they would incur if legally headquartered in Ireland, even net of full Irish BEPS tools like the double Irish. This represents a substantive challenge to the Irish economy (see effect of U.S. Tax Cuts and Jobs Act). However, § Technical issues with-TCJA mean some Irish BEPS tools, such as Apple's § Green Jersey, have been enhanced.
Ireland's recent expansion into traditional tax haven services (e.g. Cayman Island and Luxembourg type ICAVs and L-QIAIFs) is a diversifier from U.S. corporate tax haven services. Brexit has been disappointing for Ireland in its failure to attract any London financial services firms, underlying Ireland's traditional weakness in non-U.S. corporates. Brexit has led to growth in UK centric tax-law firms (including offshore magic circle firms), setting up offices in Ireland to handle traditional tax haven services for clients.
|1||Apple Ireland||United States||technology||not inversion||119.2|
|3||Medtronic plc||United States||life sciences||2015 inversion||26.6|
|4||United States||technology||not inversion||26.3|
|5||Microsoft||United States||technology||not inversion||18.5|
|6||Eaton||United States||industrial||2012 inversion||16.5|
|8||Allergan Inc||United States||life sciences||2013 inversion||12.9|
|9||United States||technology||not inversion||12.6|
|10||Shire||Great Britain||life sciences||2008 inversion||12.4|
|11||Ingersoll-Rand||United States||industrial||2001 inversion||11.5|
|12||Dell Ireland||United States||technology||not inversion||10.3|
|13||Oracle||United States||technology||not inversion||8.8|
|14||Smurfit Kappa Group||Ireland||-||-||8.6|
|16||Pfizer||United States||life sciences||not inversion||7.5|
|19||Merck & Co||United States||life sciences||not inversion||6.1|
|20||Sandisk||United States||technology||not inversion||5.6|
|21||Boston Scientific||United States||life sciences||not inversion||5.0|
|24||Perrigo||United States||life sciences||2013 inversion||4.1|
|25||Experian||Great Britain||technology||2007 inversion||3.9|
|29||Mallinckrodt Pharma||United States||life sciences||2013 inversion||3.3|
|31||Alexion Pharma||United States||life sciences||not inversion||3.2|
|33||VMware||United States||technology||not inversion||2.9|
|34||Abbott Laboratories||United States||life sciences||not inversion||2.9|
|35||ABP Food Group||Ireland||-||-||2.8|
|36||Kingston Technology||United States||technology||not inversion||2.7|
|38||Circle K Ireland||Ireland||-||-||2.6|
|39||Tesco Ireland||Great Britain||food retail||not inversion||2.6|
|40||McKesson||United States||life sciences||not inversion||2.6|
|43||Intel Ireland||United States||technology||not inversion||2.3|
|44||Gilead Sciences||United States||life sciences||not inversion||2.3|
|45||Adobe||United States||technology||not inversion||2.1|
|48||Baxter||United States||life sciences||not inversion||2.0|
From the above table:
While Ireland's development into traditional tax haven tools (e.g. ICAVs and L-QIAIFs) is more recent, Ireland's status as a corporate tax haven has been noted since 1994 (the first Hines-Rice tax haven paper), and discussed in the U.S. Congress for a decade. A lack of progress, and delays, in addressing Ireland's corporate tax BEPS tools is apparent:
Tax haven experts explain these contradictions as resulting from the different agendas of the major OECD taxing authorities, and particularly the U.S., and Germany, who while not themselves considered tax havens or corporate tax havens, rank #2 and #7 respectively in the 2018 Financial Secrecy Index of tax secrecy jurisdictions:
Before the passing of the TCJA in December 2017, the U.S. was one of eight remaining jurisdictions to run a "worldwide" taxation system, which was the principal obstacle to U.S. corporate tax reform, as it was not possible to differentiate between the source of income.[v] The seven other "worldwide" tax systems, are: Chile, Greece, Ireland, Israel, Korea, Mexico, and Poland.
Tax experts expect the anti-BEPS provisions of the TCJA's new hybrid "territorial" taxation system, the GILTI and BEAT tax regimes, to neutralize some Irish BEPS tools (e.g. the double Irish and the single malt). In addition, the TCJA's FDII tax regime makes U.S.-controlled multinationals indifferent as to whether they charge-out their IP from the U.S. or from Ireland, as net effective tax rates on IP, under the FDII and GILTI regimes, are very similar. Post-TCJA, S&P500 IP-heavy U.S.-controlled multinationals, have guided 2019 tax rates that are similar, whether legally headquartered in Ireland or the U.S.[h]
Tax academic, Mihir A. Desai, in a post-TCJA interview in the Harvard Business Review said that: "So, if you think about a lot of technology companies that are housed in Ireland and have massive operations there, they're not going to maybe need those in the same way, and those can be relocated back to the U.S.
It is expected Washington will be less accommodating to U.S. multinationals using Irish BEPS tools and locating IP in tax havens. The EU Commission has also become less tolerant of U.S. multinational use of Irish BEPS tools, as evidenced by the EUR13 billion fine on Apple for Irish tax avoidance from 2004 to 2014. There is widespread unhappiness of Irish BEPS tools in Europe, even from other tax havens.
"Now that [U.S.] corporate tax reform has passed, the advantages of being an inverted company are less obvious"
While the Washington and EU political compromises tolerating Ireland as a corporate tax haven may be eroding, tax experts point to various technical flaws in the TCJA which, if not resolved, may actually enhance Ireland as a U.S. corporate tax haven:
A June 2018 IMF country report on Ireland, while noting the significant exposure of Ireland's economy to U.S. corporates, concluded that the TCJA may not be as effective as Washington expects in addressing Ireland as a U.S. corporate tax haven. In writing its report, the IMF conducted confidential anonymous interviews with Irish corporate tax experts.
Some tax experts, noting Google and Microsoft's actions in 2018, assert these flaws in the TCJA are deliberate, and part of the U.S. Administration's original strategy to reduce aggregate effective global tax rates for U.S. multinationals to circa 10-15% (i.e. 21% on U.S. income, and 2.5% on non-U.S. income, via Irish BEPS tools). There has been an increase in U.S. multinational use of Irish intangible capital allowances, and some tax experts believe that the next few years will see a boom in U.S. multinationals using the Irish "Green Jersey" BEPS tool and on-shoring their IP to Ireland (rather than the U.S.).
As discussed in § Hines-Rice 1994 definition and § Source of contradictions, the U.S. Treasury's corporation tax policy seeks to maximise long-term U.S. taxes paid by using corporate tax havens to minimise near-term foreign taxes paid. In this regard, it is possible that Ireland still has a long-term future as a U.S. corporate tax haven.
It is undoubtedly true that some American business operations are drawn offshore by the lure of low tax rates in tax havens; nevertheless, the policies of tax havens may, on net, enhance the U.S. Treasury's ability to collect tax revenue from American corporations.
Papers marked with (?) were also cited by the EU Commission's 2017 summary as the most important research on tax havens.
|1?||Fiscal Paradise: Foreign tax havens and American Business||Quarterly Journal of Economics||109 (1) 149-182||James R. Hines Jr., Eric M. Rice||1994|
|2?||The demand for tax haven operations||Journal of Public Economics||90 (3) 513-531||Mihir A. Desai, C Fritz Foley, James R. Hines Jr.||2006|
|3?||Which countries become tax havens?||Journal of Public Economics||93 (9-10) 1058-1068||Dhammika Dharmapala, James Hines||2009|
|4?||The Missing Wealth of Nations: Are Europe and the U.S. net Debtors or net Creditors?||Quarterly Journal of Economics||128 (3) 1321-1364||Gabriel Zucman||2013|
|5?||Tax competition with parasitic tax havens||Journal of Public Economics||93 (11-12) 1261-1270||Joel Slemrod, John D. Wilson||2006|
|6||What problems and opportunities are created by tax havens?||Oxford Review of Economic Policy||24 (4) 661-679||Dhammika Dharmapala, James Hines||2008|
|7||In praise of tax havens: International tax planning
(The paper does not explicitly list/reference any country as a tax haven)
|European Economic Review||54 (1) 82-95||Qing Hong, Michael Smart||2010|
|8?||End of bank secrecy: Evaluation of G20 tax haven crackdown
(Zucman does not explicitly label Ireland a tax haven as he does in other papers)
|American Economic Journal||6 (1) 65-91||Niels Johannesen, Gabriel Zucman||2014|
|9?||Taxing across borders: Tracking wealth and corporate profits||Journal of Economic Perspectives||28 (4) 121-148||Gabriel Zucman||2014|
|10?||Treasure Islands||Journal of Economic Perspectives||24 (4) 103-26||James R. Hines Jr.||2010|
(with at least 300 citations on Google Scholar)
Pearse Doherty: It was interesting that when [MEP] Matt Carthy put that to the Minister's predecessor (Michael Noonan), his response was that this was very unpatriotic and he should wear the green jersey. That was the former Minister's response to the fact there is a major loophole, whether intentional or unintentional, in our tax code that has allowed large companies to continue to use the double Irish [called single malt]
Separately, Taoiseach Leo Varadkar told attendees [at a U.S. Embassy event in Ireland] that "Ireland is not a tax haven, we do not wish to be a haven, nor do we wish to be seen as one".
New Gabriel Zucman study claims State shelters more multinational profits than the entire Caribbean
Research conducted by academics at the University of California, Berkeley and the University of Copenhagen estimated that foreign multinationals moved EUR90 billion of profits to Ireland in 2015 -- more than all Caribbean countries combined.
Figure 3. Foreign Direct Investment - Over half of Irish outbound FDI is routed to Luxembourg
[Ireland] It is the "captured state", over again.
John Christensen and Mark Hampton (1999) have shown [..] how several tax havens [including Ireland] have in effect been "captured" by these private interests, which literally draft local laws to suit their interests.
Pascal Saint Amans, the director of the OCED's centre for tax policy and administration, told an Oireachtas Committee today that Ireland does not meet any of the organisation's criteria to be defined as a tax haven - that there is no taxes, no transparency and no exchange of information
Alex Cobham of the Tax Justice Network said: It's disheartening to see the OECD fall back into the old pattern of creating 'tax haven' blacklists on the basis of criteria that are so weak as to be near enough meaningless, and then declaring success when the list is empty."
European Commissioner for Economic and Financial Affairs, Taxation and Customs Pierre Moscovici was in Dublin on Tuesday, appearing before the Oireachtas Finance Committee where he faced questions from TDs and Senators on the relaunched Common Consolidated Corporate Tax Base (CCCTB).
* Ireland joined Panama and Monaco on Brazil blacklist.
Lower foreign tax rates entail smaller credits for foreign taxes and greater ultimate U.S. tax collections (Hines and Rice, 1994). Dyreng and Lindsey (2009), offer evidence that U.S. firms with foreign affiliates in certain tax havens pay lower pay lower foreign taxes and higher U.S. taxes than do otherwise-similar large U.S. companies
Finally, we find that U.S. firms with operations in some tax haven countries have higher federal tax rates on foreign income than other firms. This result suggests that in some cases, tax haven operations may increase U.S. tax collections at the expense of foreign country tax collections.
"Ireland solidifies its position as the #1 tax haven," Zucman said on Twitter. "U.S. firms book more profits in Ireland than in China, Japan, Germany, France & Mexico combined. Irish tax rate is 5.7%."
While lawmakers generally refer to the new system as a "territorial" tax system, it is more appropriately described as a hybrid system.
The new tax code addresses the historical competitive disadvantage of U.S.-based multinationals in terms of tax rates and international access to capital, and helps level the playing field for U.S. companies, Pfizer CEO Ian Read.
In 2007 to 2009, WPP, United Business Media, Henderson Group, Shire, Informa, Regus, Charter and Brit Insurance all left the UK. By 2015, WPP, UBM, Henderson Group, Informa and Brit Insurance have all returned
Frankfurt has emerged as the biggest winner in the fight for thousands of London-based jobs that will have to be relocated to new hubs inside the European Union after Brexit.
Transfers from London mainly going to Frankfurt, Luxembourg, Brussels and Paris
Jurisdictions with the largest financial systems relative to GDP (Exhibit 2-3) tend to have relatively larger OFI [or Shadow Banking] sectors: Luxembourg (at 92% of total financial assets), the Cayman Islands (85%), Ireland (76%) and the Netherlands (58%)
A new University of Amsterdam CORPNET study has found that the Netherlands, the UK, Switzerland, Singapore and Ireland are the leading intermediary countries that corporations use to funnel their money to and from tax havens
We identify 41 countries and regions as tax havens for the purposes of U. S. businesses. Together the seven tax havens with populations greater than one million (Hong Kong, Ireland, Liberia, Lebanon, Panama, Singapore, and Switzerland) account for 80 percent of total tax haven population and 89 percent of tax haven GDP.
Appendix Table 2: Tax Havens
Various attempts have been made to identify and list tax havens and offshore finance centres (OFCs). This Briefing Paper aims to compare these lists and clarify the criteria used in preparing them.
Tax havens are low-tax jurisdictions that offer businesses and individuals opportunities for tax avoidance" (Hines, 2008). In this paper, I will use the expression "tax haven" and "offshore financial center" interchangeably (the list of tax havens considered by Dharmapala and Hines (2009) is identical to the list of offshore financial centers considered by the Financial Stability Forum (IMF, 2000), barring minor exceptions)
Some experts see no difference between tax havens and OFCs, and employ the terms interchangeably.
Yet today it is difficult to distinguish between the activities of tax havens and OFCs.
The economist [Kevin Hassett], who has previously referred to the Republic as a tax haven, said there had been a need to introduce reforms in the US, which have brought its corporate rate down to 21 per cent.
Figure D: Tax Haven Literature Review: A Typology
Tax Havens by Most Cited
There are roughly 45 major tax havens in the world today. Examples include Andorra, Ireland, Luxembourg and Monaco in Europe, Hong Kong and Singapore in Asia, and the Cayman Islands, the Netherlands Antilles, and Panama in the Americas.
Table 1: 52 Tax Havens
Table 1: List of Tax Havens
Page 1067: List of Tax Havens
The balance of payments provides a country-by-country decomposition of this total, indicating that 55 percent are made in six tax havens: the Netherlands, Bermuda, Luxembourg, Ireland, Singapore, and Switzerland (Figure 2)
Such profit shifting leads to a total annual revenue loss of $200 billion globally
Examples of such tax havens include Ireland and Luxembourg in Europe, Hong Kong and Singapore in Asia, and various Caribbean island nations in the Americas.
The eight major pass-through economies--the Netherlands, Luxembourg, Hong Kong SAR, the British Virgin Islands, Bermuda, the Cayman Islands, Ireland, and Singapore--host more than 85 percent of the world's investment in special purpose entities, which are often set up for tax reasons.
Table A1: Tax havens full list:IRELAND
A Survey of surveys of the eleven best known and most authoritative lists of tax havens of the world found that Switzerland is considered as a tax haven by nine of them, Luxembourg and Ireland by eight, the Netherlands by two and Belgium by one
Countries traditionally perceived as tax havens (Cyprus, Ireland and the United Kingdom)
Ireland meets all of these characteristics and togethr with Luxembourg, the Netherlands and Switzerland have been described as the four OECD tax havens.
The willingness to brush dirt under the carpet to support the financial sector, and an equating of these policies with patriotism (sometimes known in Ireland as the Green Jersey agenda,) contributed to the remarkable regulatory laxity with massive impacts in other nations (as well as in Ireland itself) as global financial firms sought an escape from financial regulation in Dublin.
Misleadingly, studies cited by the Irish Times and other outlets suggest that the effective tax rate is close to the headline 12.5 percent rate - but this is a fictional result based on a theoretical 'standard firm with 60 employees' and no exports: it is entirely inapplicable to transnationals. Though there are various ways to calculate effective tax rates, other studies find rates of just 2.5-4.5 percent.
The study provided figures for the combined profits reported by American multinational corporations in '10 notorious tax havens' - a list that included Ireland, the Netherlands and Switzerland
Table 1: Jurisdictions Listed as Tax Havens or Financial Privacy Jurisdictions and the Sources of Those Jurisdictions
Table 1. Countries Listed on Various Tax Haven Lists
A number of studies show that multinational corporations are moving "mobile" income out of the United States into low or no tax jurisdictions, including tax havens such as Ireland, Bermuda, and the Cayman Islands.
Senators LEVIN and McCAIN: Most reasonable people would agree that negotiating special tax arrangements that allow companies to pay little or no income tax meets a common-sense definition of a tax haven.
Large corporations like Apple, Google, Nike and Starbucks all take steps to book profits in tax havens such as Bermuda and Ireland
At least 125 major U.S. companies have registered several hundred subsidiaries or investment funds at 70 Sir John Rogerson's Quay, a seven-story building in Dublin's docklands, according to a review of government and corporate records by The Wall Street Journal. The common thread is the building's primary resident: Matheson, an Irish law firm that specializes in ways companies can use Irish tax law.
That undermines Ireland's insistence that it is not a tax haven, making it more difficult to defend its system in an international climate that is turning sharply against tax avoidance.
The Netherlands, and other low-tax havens such as Ireland and Luxembourg, have attracted much criticism from other countries for the legal loopholes they leave open to encourage such tax avoidance by big corporations.
These examples feel far more relevant to the corporate tax issue analysis than comparisons to small economies and tax havens like Ireland and Switzerland upon which the CEA relies
Our research shows that six European tax havens alone (Luxembourg, Ireland, the Netherlands, Belgium, Malta and Cyprus) siphon off a total of EUR350bn every year
IRELAND'S CORPORATE TAX rate has come under heavy criticism at the World Economic Forum in Davos, Switzerland.
Members of the European parliament have voted to include the Netherlands, Ireland, Luxembourg, Malta and Cyprus on the official EU tax haven black list.
The Republic helps big multinationals to engage in aggressive tax planning and the European Commission should regard it as one of five "EU tax havens" until substantial tax reforms are implemented.
SPD parliamentary secretary Carsten Schneider called Irish "tax dumping" a "poison for democracy" ahead of a vote which saw the Bundestag grant Ireland's request
We won't go along with this free pass for Ireland because we don't want ongoing tax dumping in the EU. We're not talking about Ireland's 12.5 per cent tax rate here, but secret deals that reduce that tax burden to near zero.
Google Inc., Facebook Inc. and LinkedIn Corp. wound up in Ireland because they could reduce their tax bills. Their success is leading European and U.S. politicians to label the country a tax haven that must change its ways
The four OECD member countries Luxembourg, Ireland, Belgium and Switzerland, which can also be regarded as tax havens for multinationals because of their special tax regimes.
Polish Prime Minister Mateusz Morawiecki made an emotive plea for reform - saying EU tax havens should be abolished in a thinly veiled swipe at Ireland.
Despite such developments, "Team Ireland" has constantly dismissed the description of Ireland as a tax haven, even when the extent of that haven is patently obvious.
There is a broad consensus that Ireland must defend its 12.5 per cent corporate tax rate. But that rate is defensible only if it is real. The great risk to Ireland is that we are trying to defend the indefensible. It is morally, politically and economically wrong for Ireland to allow vastly wealthy corporations to escape the basic duty of paying tax. If we don't recognise that now, we will soon find that a key plank of Irish policy has become untenable.
And as the UN's Philip Aston says, 'when lists of tax havens are drawn up, Ireland is always prominently among them'. The U.S. Senate similarly found that by any 'common sense definition of a tax haven' Ireland easily met the criteria. I mean when Forbes regularly ranks you in their list of 'Top ten tax havens', there's not really much of a debate to be had.
Eurostat's structural business statistics give a range of measures of the business economy broken down by the controlling country of the enterprises. Here is the Gross Operating Surplus generated in Ireland in 2015 for the countries with figures reported by Eurostat.
Ireland has, more or less, stopped using GDP to measure its own economy. And on current trends [because Irish GDP is distorting EU-28 aggregate data], the eurozone taken as a whole may need to consider something similar.
Profit shifting also has a significant effect on trade balances. For instance, after accounting for profit shifting, Japan, the UK, France, and Greece turn out to have trade surpluses in 2015, in contrast to the published data that record trade deficits. According to our estimates, the true trade deficit of the United States was 2.1% of GDP in 2015, instead of 2.8% in the official statistics--that is, a quarter of the recorded trade deficit of the United States is an illusion of multinational corporate tax avoidance.
Ireland's effective tax rate on all foreign corporates (U.S. and non-U.S.) is 4%
Economists suggest offshore activity has given misleading picture of health.
The use of private "unlimited liability company" (ULC) status, which exempts companies from filing financial reports publicly. The fact that Apple, Google and many others continue to keep their Irish financial information secret is due to a failure by the Irish government to implement the 2013 EU Accounting Directive, which would require full public financial statements, until 2017, and even then retaining an exemption from financial reporting for certain holding companies until 2022
Local subsidiaries of multinationals must always be required to file their accounts on public record, which is not the case at present. Ireland is not just a tax haven at present, it is also a corporate secrecy jurisdiction.
125 Russian-linked companies raise EUR103 billion through IFSC; some entities linked to embargoed and sanctioned companies
Regulation has been described as light touch regulation/unregulated
SPVs, QIAIFs and ICAVs. They're acronyms only corporate wonks could love. But they have entered the lexicon of the Dáil in recent months as Opposition members have highlighted how these corporate structures have been used to great advantage by so-called vulture funds to minimise taxes on property bought at bargain basement prices in recent years.
Regulator attributes decline to the decision of funds to exit their so-called 'section 110 status'
Fianna Fáil claims that funds have discovered a "new nirvana". Documents also reveal new strategy to avoid regulation.
Vulture funds are putting in place new strategies to avoid tax and regulation, the Sunday Business Post reports. Citing a letter from Fianna Fail TD Stephen Donnelly to the Minister for Finance, it says the funds have moved substantial sums from the controversial Section 110 companies and into other entities called L-QIAIFs (loan-originating qualifying alternative investment funds). These do not file public accounts.
IP onshoring is something we should be expecting to see much more of as we move towards the end of the decade. Buckle up!
Irish politicians are "mindlessly in favour" of growing the International Financial Services Centre (IFSC), according to a former deputy governor of the Central Bank
The same source in comparing different investment vehicles states that :- Another positive of the Section 110 Company is that there are no regulatory restrictions regarding lending as is the case with a QIF (Qualifying Investor Fund).
The International Monetary Fund (IMF) has raised concerns about instances where individual bankers and lawyers were appointed to hundreds of boards of unregulated special-purpose vehicles in Dublin's International Financial Services Centre.
Certain funds in operation here are seeing foreign property investors paying no tax on income. The value of property owned in these QIAIFs is in the region of EUR300 billion.
Icavs were introduced last year, following lobbying by the funds industry, to tempt certain types of offshore fund business to Ireland. It has since emerged, however, that the structures have been widely utilised to avoid tax on Irish property.
Ireland is a wonderful, special country in many ways. But when it comes to providing foreigners with lax financial regulation or tax trickery, it is a goddamned rogue state
The massive profitability levels of European banks in Ireland suggests that large profits may be reported in Ireland as a tax-avoidance strategy
The massive profitability levels of European banks in Ireland suggests that large profits may be reported in Ireland as a tax-avoidance strategy
Irish withholding tax on transfers to Luxembourg can be avoided if structured as a Eurobond
The Irish Collective Asset-management Vehicle was a nifty little tax structure introduced last year. Designed to primarily facilitate the transfer of U.S. funds into Dublin, it allows foreign investors to channel their investments through Ireland while paying no tax.
Internal Department of Finance briefing documents reveal that officials believe there has been "extremely significant" tax leakage due to investors using special purpose vehicles.
Since then we have retained our position as the leading Irish counsel on ICAVs and to date have advised on 30% of all ICAV sub-funds authorised by the Central Bank, which is nearly twice as many as our nearest rival.
ANDREA KELLY (PwC Ireland): "We expect most Irish QIAIFs to be structured as ICAVs from now on and given that ICAVs are superior tax management vehicles to the to Cayman Island SPCs, Ireland should attract substantial re-domiciling business
But on another level this is an Irish version of a phenomenon we've encountered across the tax haven world: the state 'captured' by offshore financial services.
Brussels. 30.8.2016 C(2016) 5605 final. Total Pages (130)
The Commission's investigation concluded that Ireland granted illegal tax benefits to Apple, which enabled it to pay substantially less tax than other businesses over many years. In fact, this selective treatment allowed Apple to pay an effective corporate tax rate of 1 percent on its European profits in 2003 down to 0.005 percent in 2014.
As a consequence of the overall scale of these additions, elements of the results that would previously been published are now suppressed to protect the confidentiality of the contributing companies, in accordance with the Statistics Act 1993
A key architect [for Apple] was Baker McKenzie, a huge law firm based in Chicago. The firm has a reputation for devising creative offshore structures for multinationals and defending them to tax regulators. It has also fought international proposals for tax avoidance crackdowns.
Confidentiality and use of information for statistical purposes: Information obtained under the Statistics Act is strictly confidential, under Section 33 of the Statistics Act, 1993. It may only be accessed by Officers of Statistics, who are required to sign a Declaration of Secrecy under Section 21.
Revenue said: "Interactions between Revenue and individual taxpayers are subject to the taxpayer confidentiality provisions of Section 851A".
"The Irish authorities knew exactly what was going on, long before the international community finally blew the whistle.
But Mr Kenny noted that Oxfam included Ireland's 12.5 per cent corporation tax rate as one of the factors for deeming it a tax haven. "The 12.5 per cent is fully in line with the OECD and international best practice in having a low rate and applying it to a very wide tax base."
Suggestions that Ireland are a tax haven simply because of our longstanding 12.5% corporate tax rate are totally out of line with the agreed global consensus that a low corporate tax rate applied to a wide tax base is good economic policy for attracting investment and supporting economic growth.
A study by James Stewart, associate professor in finance at Trinity College Dublin, suggests that in 2011 the subsidiaries of U.S. multinationals in Ireland paid an effective tax rate of 2.2 per cent.
Meanwhile, the tax rate reported by those Irish subsidiaries of U.S. companies plummeted to 3% from 9% by 2010
Structure 1: The profits of the Irish company will typically be subject to the corporation tax rate of 12.5% if the company has the requisite level of substance to be considered trading. The tax depreciation and interest expense can reduce the effective rate of tax to a minimum of 2.5%.
The tax deduction can be used to achieve an effective tax rate of 2.5% on profits from the exploitation of the IP purchased. Provided the IP is held for five years, a subsequent disposal of the IP will not result in a clawback.
Intellectual Property: The effective corporation tax rate can be reduced to as low as 2.5% for Irish companies whose trade involves the exploitation of intellectual property. The Irish IP regime is broad and applies to all types of IP. A generous scheme of capital allowances in Ireland offers significant incentives to companies who locate their activities in Ireland. A well-known global company [Accenture in 2009] recently moved the ownership and exploitation of an IP portfolio worth approximately $7 billion to Ireland.
When combined with other features of Ireland's IP tax regime, an effective rate as low as 2.5% can be achieved on IP related income
Under the arrangement - known as the special assignee relief (Sarp) - 30% of income above EUR75,000 is exempt from income tax. Those who benefit are also allowed a EUR5,000 per child tax-free allowance for school fees, if those fees are paid by their employer
There is no single definition of a tax haven, although there are a number of commonalities in the various concepts used
IFAC member and economist Martina Lawless said on the basis of the OECD's criteria for tax havens, which are internationally recognised, Ireland was not one.
The OECD outlined certain factors which in its view described a tax haven.
The OECD stated that for a country to be a tax haven, it had to have certain characteristics.
As a result of the Bush Administration's efforts, the OECD backed away from its efforts to target "harmful tax practices" and shifted the scope of its efforts to improving exchanges of tax information between member countries.
The OECD is clearly ill-equipped to deal with tax-havens, not least as many of its members, including the UK, Switzerland, Ireland and the Benelux countries are themselves considered tax havens
TAX HAVENS: 1.Andorra 2.Anguilla 3.Antigua and Barbuda 4.Aruba 5.Bahamas 6.Bahrain 7.Barbados 8.Belize 9.British Virgin Islands 10.Cook Islands 11.Dominica 12.Gibraltar 13.Grenada 14.Guernsey 15.Isle of Man 16.Jersey 17.Liberia 18.Liechtenstein 19.Maldives 20.Marshall Islands 21.Monaco 22.Montserrat 23.Nauru 24.Net Antilles 25.Niue 26.Panama 27.Samoa 28.Seychelles 29.St. Lucia 30.St. Kitts & Nevis 31.St. Vincent and the Grenadines 32.Tonga 33.Turks & Caicos 34.U.S. Virgin Islands 35.Vanuatu
A country with little or no taxation that offers foreign individuals or corporations residency so that they can avoid tax at home.
A tax haven is a country or place which has a low rate of tax so that people choose to live there or register companies there in order to avoid paying higher tax in their own countries.
a place where people pay less tax than they would pay if they lived in their own country
It was certainly an improvement on the list recently published by the Organisation for Economic Co-operation and Development, which featured only one name - Trinidad & Tobago - but campaigners believe the European Union has much more to do if it is to prove it is serious about addressing tax havens.
EU members were not screened but Oxfam said that if the criteria were applied to publicly available information the list should feature 35 countries including EU members Ireland, Luxembourg, the Netherlands and Malta
"Obviously many countries in the European Union are places where aggressive tax optimisation finds its place," Pierre Moscovici, the European commissioner for economic affairs and taxation, told reporters in Brussels yesterday. "Some European countries are black holes. . . I want to address this."
Ireland has been likened to a tax haven in a new report which was overwhelmingly accepted by the European Parliament.
It focuses particularly on the dominant approach within the economics literature on income shifting, which dates back to Hines and Rice (1994) and which we refer to as the "Hines-Rice" approach.
Concerning the characterization of tax havens, we follow the definition proposed by Hines and Rice (1994) which has been recently used by Dharmapala and Hines (2009). A tax haven is defined as a location with low corporate tax rates, banking and business secrecy, advance communication facilities and self-promotion as an offshore financial centre (Hines and Rice, 1994, Appendix 1 p. 175)
The study said "a large body of economic research over the last 15 years" contradicted the popular view that offshore centres erode tax collections, divert economic activity and otherwise burden nearby high-tax countries.
[In the Whitehouse advocating for the TCJA] Applying Hines and Rice's (1994) findings to a statutory corporate rate reduction of 15 percentage points (from 35 to 20 percent) suggests that reduced profit shifting would result in more than $140 billion of repatriated profit based on 2016 numbers.
[According to the Department of Finance] The Zucman paper says it used an old 1993 list of "havens" drawn up by U.S. tax academics, James Hines and Eric Rice, and added the Netherlands and Belgium
A research paper naming Ireland as the "world's biggest tax haven" was flawed as it used data more than 20 years old -- but the perception could be harmful to the country's reputation, a leading economist has said.
The total value of U.S. business investment in Ireland - ranging from data centres to the world's most advanced manufacturing facilities - stands at $387bn (EUR334bn) - this is more than the combined U.S. investment in South America, Africa and the Middle East, and more than the BRIC countries combined.
The country's top-ranked university fell three places to 120th place in The Times Higher Education world university rankings for 2019.
Shanahan is part politician, part diplomat, and part salesman.
Eoghan Murphy's claim was that Ireland had "the highest education in Europe". Taking this to mean "best", it's clear that this is a vast exaggeration of the reality, according to most key measures. We rate the claim FALSE.
Dublin has overtaken London in a worldwide cost of living rankings because of the Brexit-induced weakening of sterling.
Ireland fell out of a top 10 ranking of the most attractive European destinations for foreign direct investment (FDI) last year, slipping to 11th place overall after being overtaken by Finland.
The gauge from the World Economic Forum ranks the "inadequate supply of infrastructure" as the greatest problem for businesses in Ireland, followed closely by tax rates and "inefficient government bureaucracy".
Germany taxes only 5% of the active foreign business profits of its resident corporations. [..] Furthermore, German firms do not have incentives to structure their foreign operations in ways that avoid repatriating income. Therefore, the tax incentives for German firms to establish tax haven affiliates are likely to differ from those of U.S. firms and bear strong similarities to those of other G-7 and OECD firms.
Intellectual property (IP) has become the leading tax avoidance vehicle in the world today.
Brussels is challenging the "double Irish" tax avoidance measure prized by big U.S. tech and pharma groups, putting pressure on Dublin to close it down or face a full-blown investigation. [..] The initial enquiries have signalled that Brussels wants Dublin to call time on the tax gambit, which has helped Ireland become a hub for American tech and pharma giants operating in Europe.
Figures released in April 2017 show that since 2015 there has been a dramatic increase in companies using Ireland as a low-tax or no-tax jurisdiction for intellectual property (IP) and the income accruing to it, via a nearly 1000% increase in the uptake of a tax break expanded between 2014 and 2017
With a conservatively estimated annual revenue loss of USD 100 to 240 billion, the stakes are high for governments around the world.
That is certainly one of the conclusions of a new working paper [by Gabriel Zucman et alia] on the U.S. corporation tax regime, and how it helps U.S. business compete against the rest of the world. In short, the authors believe that profit-shifting facilitated by the U.S. tax code has given U.S. companies a huge competitive advantage over foreign rivals - to the benefit of shareholders in those multinationals
The reason why EU-based multinationals are not shifting profits to Ireland is that their national tax authorities don't permit it. This contrasts with U.S. tax law, which has, for decades, facilitated U.S. multinationals to escape paying corporation tax in the US.
Case Studies of transitions from "Worldwide" to "Territorial"
So, if you think about a lot of technology companies that are housed in Ireland and have massive operations there, they're not going to maybe need those in the same way, and those can be relocated back to the U.S.
[..] most of the profits booked by U.S. firms abroad continue to appear in a few low tax jurisdictions, and well, the resulting data distortions are getting pretty big. I am pretty confident the U.S. tax reform didn't solve the issue of profit-shifting.
Cutting the official corporate tax rate to 20 per cent from its present 35 per cent -- a level that U.S. companies say hurts them in global competition -- would leave companies short of the 15 per cent Mr Trump promised as a candidate